'It’s sort of unbelievable': A reusable water bottle that won over Starbucks' CEO could reach $100 million in sales this year

You've probably seen
aS'well water bottleout in the wild, with its unmistakable,
sleek, stainless-steel physique and boldly colored exterior, or
perhaps faux marble or wood facade.

If you haven't, you're bound to
see one soon. The company is growing rapidly and is now sold
everywhere from mom-and-pop shops to nationwide retailers like
Nordstrom and Target to Starbucks stores around the world.

Ad

Last year, S'well - the
brainchild of CEO Sarah Kauss (No. 49 on the
BI 100: The Creators) - pulled in $50 million in sales, a
mark that the company hopes to double this year.

But S'well might never have happened at all save for some
timely encouragement and wisdom Kauss received from her
mother.

Six years ago, Kauss was enjoying a much-needed vacation in
Arizona with her mother. At the time, the then 35-year-old
Harvard Business School graduate was working "a million hours" in
a demanding but successful career in commercial real estate
development. Her mother, who was celebrating five years free of
cancer, began reflecting on life.

"We had this deep conversation about 'What would you do if you
could do anything?' - she almost felt like she had an extra
life," Kauss said.

Her mom decided to become a painter. Kauss, a University of
Colorado at Boulder alum with an environmentalist spirit, told
her mother about an idea to create a reusable water bottle that
didn't look like bulky camping gear. Her mother pushed her to
take plunge.

"I just thought the world needed a more fashionable water
bottle," said Kauss, who envisioned something both beautiful and
useful that could sell in the store at the Museum of Modern Art
(today, the bottles are in fact
sold there).

"I just thought the world needed a more fashionable water
bottle."

But beyond design, Kauss thought her idea could make a
significant impact on the environment, an issue she cared deeply
about. With the right blend of fashion and function,
she thought, S'well could create a water bottle that's so
enjoyable to use that people will stop drinking from plastic
bottles -
50 billion of which clog landfills in the US each year.

So Kauss returned home to New York and invested $30,000 in
savings to start S'well right out of her NYC apartment.

She spent the next six months working to get a prototype of the
bottle, find a factory, and launch a website.

"I didn't know how big the market was [for water bottles], I
thought I was building a product for me and maybe a small group
of people like me," Kauss said.

The Oprah effect

The combination of style and
functionality - made of non-leaching and non-toxic stainless
steel, the bottle keeps liquids cold for 24 hours and hot for 12
hours - struck a nerve with customers. A few months after
launching S'well, early bulk orders came in from Facebook and
Harvard, and Kauss landed in Crate and Barrel for the holiday
season.

"Those first orders were great
because it gave me a confidence that people were going to buy
[the product]," she said.

Then Kauss got a call from a
senior editor of O, The Oprah
Magazine after sending her a sample bottle. The editor took
the bottle on vacation and loved it. She wanted to feature it in
the magazine, but had one request: Send every color you have. But
the bottles only came in blue, so Kauss scrambled to create a new
palate of colors and send them off to the manufacturer.

caption

S'well bottles come in more than 200 colors and designs.

"It was sort of the moment that I
said 'OK this isn't a project, we're a company,'" Kauss
recalled.

About four months later, Kauss'
array of colored bottles made it into the magazine'sMust Have Things for Summer
2011list. "What was
surprising is how long those magazines live for - we have a 'How
did you hear about us?' on the website and months and months
later people would be saying they saw it in Oprah," Kauss
said.

Partnering with Starbucks

On the heels of the Oprah
feature, which caused sales to surge in the 600 small retail
stores the bottles were sold in at the time, Kauss scored a trial
period with Starbucks in 2012 to sell bottles in 140 stores in
Atlanta and Austin. The bottles sold out, cementing the
partnership with Starbucks, which would become S'well's most
lucrative and lasting partner.

The following year, S'well
created a hyperlocal collection with Starbucks for its stores in
New York City, Seattle, and Hawaii. The bottles were a hit, but
it wasn't until Kauss had the chance opportunity to meet
Starbucks CEO Howard Schultz (No. 2 on the
BI 100: The Creators)that sales really ramped up.

Kauss spotted Schultz standing alone at the grand opening of a
Starbucks coffee bar in Seattle, so she grabbed a S'well bottle
and introduced herself. Schultz reveled in the story of S'well
and wondered why the bottles weren't in more stores, Kauss
said. He invited her to meet with him and his senior
leadership team the next day to discuss expansion.

The impact of that meeting was
profound: S'well found itself integrated at Starbucks stores
around the world - 10,000 locations in North America, as well as
Brazil and throughout Asia.

More than just sheer scope, Starbucks also shared a commitment to
higher ideals, including stringent fair trade and sustainability
standards. In fact, it took S'well's factory nearly two years to
meet Starbucks' standards.

"They do so much work to make sure everything is good for the
environment and good for the workers and it makes me feel better
when I go there as a customer because I know how much work they
do," Kauss said.

Rapid expansion

Buyers are smitten with S'well.
In 2015, after rolling out in thousands of Starbucks stores,
S'well reached $50 million in sales, a gigantic leap from $10
million the previous year.

The company is continuing its
rapid expansion in 2016. This summer, S'well will launch at
Starbucks in another 37 countries in Europe, the Middle East,
Russia, and South Africa. S'well
also debuted an exclusive line at Target stores this spring
called S'ip by
S'well, a smaller
bottle size at a lower price point ($25), which will roll out
nationwide by the holiday season.

Kauss says this year S'well sales
could as much as double to $100 million.

"It's exciting. It's sort of
unbelievable. You're standing at the ocean and you just don't
know how big it is," Kauss said.

caption

S'well's NYC headquarters.

Part of the reason the
company grew so much last year is its focus on being "on trend,"
a commitment that's grounded in Kauss' vision to become "the
bottle of fashion week." The company now has more than
200
designs and colors - which range in price from $25 for a
9-ounce bottle to $45 for a 25-ounce bottle - and appears at the
buzziest events including SXSW, New York fashion week, and TED
conferences. S'well also has brand partnerships with celebrities,
Kauss said, a marketing tactic that undoubtedly boosts brand
recognition, especially on social media.

But ultimately, S'well's success
comes down to customer loyalty. On average, customers have 5.5
bottles at home, according to Kauss.

"Our customers have this great
appetite, but I thought eventually we'd run out of customers
because everybody will have one that's in the market. ... but
what's surprising is that we keep coming out with new lines -
spring, summer, fall, holiday - just like a fashion brand," Kauss
said.

Many customers also appreciate S'well's social mission. A portion
of profits from every bottle sold go to the
US fund for UNICEF - $200,000 since 2015 - to help provide
clean water to children, and for every
wood-surfaced bottle sold a tree is planted through American
Forests. But while the charitable aspect is an integral part of
the business, Kauss doesn't think it's a make or break for
buyers.

"We don't even talk about it that
much with our customers, but it's just the right thing to do,"
Kauss said. "It's part of our DNA, it's part of our mission
statement and part of everything that we do. I think customers
are really smart and it has to come from an authentic
place."